Third quarter 2016 revenue

Bezons, 20th October , 2016

Atos, a global leader in digital services, today announces its revenue for the third quarter of 2016. Revenue was € 2,777 million, up +1.8% organically and +6.3% at constant exchange rates. Order entry was € 2,845 million leading to a record book to bill ratio for a Q3 at 102%.

Over the first nine months of the year, revenue growth reached +1.7% organically and +13.8% at constant exchange rates.

Thierry Breton, Chairman and CEO said: “During the last quarter, the Group continued to grow organically in all of its businesses with in particular a solid performance in the UK post Brexit and in North America, as well as in continental Europe. We continue to experience dynamic commercial activity delivering a high level of new bookings, in particular with strong momentum in defense and security. This demonstrates the relevance of our infrastructure and data management business model and makes us confident for the rest of the year. During our Investor Day on November 8, we will present our ambitions for the Group for the next three-year plan.”

Q3 2016 revenue performance by Service Line

In € Million

Q3 2016

Q3 2015*

% ORGANIC

Managed Services

1,603

1,583

+1.2%

Consulting & Systems Integration

757

750

+1.0%

Big Data & Cybersecurity

134

112

+19.1%

Total IT Services

2,494

2,446

+2.0%

Worldline

283

283

+0.0%

TOTAL GROUP

2,777

2,729

+1.8%

* At constant scope and exchange rates

In Managed Services, revenue was € 1,603 million, +1.2% compared to the third quarter of 2015 at constant scope and exchange rates. Growth was led by the Public & Health, and Telco, Media & Utilities sectors, more particularly in the UK thanks to higher volumes and new contracts. Revenue also grew in the Manufacturing sector, notably with IT landscape transformation contracts through automation and migration to Orchestrated Hybrid Cloud, most particularly in the US.

Over the first nine months of the year, the Service Line grew by +0.8% as the Group continues to successfully drive the transition of its customers to hybrid cloud infrastructures resulting in increased volumes and market share gains through new contracts.

In Consulting & Systems Integration revenue in the third quarter was € 757 million, up +1.0% at constant scope and exchange rates. Growth materialized in the manufacturing sector in most of the geographies, in particular with automotive and aeronautical clients, compensating for less projects in Financial Services. Revenue was up in the Public sector thanks to projects in Germany and the contribution of “Other Business Units”.
Over the first nine months, organic growth continues to improve and reached +0.7%.

Revenue increase accelerated in Big Data & Cybersecurity, up +19.1% organically to reach € 134 million in the third quarter of 2016. The activity was very strong in both Big Data and Cybersecurity. Growth was led by the Public sector, in particular with Mission Critical Systems in France and HPC in Benelux. The Telco, Media & Utilities sector was also fast growing, with HPC deliveries in France and Cybersecurity sales in Germany. The Service Line had a strong start in North America, most particularly for Cybersecurity solutions embedded in new Managed Services contracts.

Year-to-date, revenue grew by +14.7% as a result of the strategy to cross-sell the offerings on top of the traditional research and defense sectors and with the international development beyond France and Germany.

From a contributive perspective to Atos, Worldline revenue was € 283 million, stable organically as expected. The two first Business Lines grew over +4%. Merchant Services was driven by volume increase in Commercial acquiring and a strong growth in the Payment terminals business while Financial Processing benefited from high Issuing volumes in Benelux and from a strong Acquiring activity in France and India. The third Business Line, Mobility & e-Transactional Services, grew double-digit in e-Ticketing and e-Consumer & Mobility but was, as anticipated, impacted by the termination of both the VOSA contract in the UK which occurred at end of Q3 2015 and the Radar contract in France from mid-June 2016.

The Service Line grew by +3.9% over the first nine months of the year. From Q4 2016, Worldline consolidates additional revenue from Equens, Paysquare, and Komerçni Banka Smartpay.

A detailed presentation of Worldline 2016 third quarter revenue is available at worldline.com, in the investors section.

Q3 2016 revenue performance by Business Unit

In € Million

Q3 2016

FY 2014

% ORGANIC

North America

501

476

+5.2%

Germany

491

473

+3.7%

United-Kingdom & Ireland

426

409

+4.2%

France

373

364

+2.4%

Benelux & The Nordics

239

255

-6.2%

Other Business Units

463

468

-0.9%

Total IT Services

2,494

2,446

+2.0%

Worldline

283

283

+0.0%

TOTAL GROUP

2,777

2,729

+1.8%

* At constant scope and exchange rates

During the third quarter of 2016, revenue grew in most of the large Business Units:

in North America thanks to increased volumes and new contracts with private cloud components and the strong start of Big Data & Cybersecurity. The acquisition of Anthelio was completed at the end of September to drive future growth in the healthcare sector,

in Germany, in Consulting & Systems Integration where the recovery plan materialized in both new orders and revenue growth, and in Managed Services with additional business driving growth;

in United Kingdom & Ireland, led by a strong activity in the Public and Telco & Media sectors and thanks to the low exposure to the financial sector;

in France as a result of the continuous momentum of Big Data & Cybersecurity, and the successful recovery in Managed Services;

During the third quarter of the year, revenue in Worldline was stable thanks to the continued dynamic of its core payment businesses compensating for the effect of the two contracts terminated last year. Revenue was almost stable in “Other Business Units” thanks to a strong growth in Asia Pacific and South America compensating for less revenue in Central & Eastern Europe. In Benelux & The Nordics, the new management team appointed in Q2 is actively focused on the Business Unit recovery and has already won contracts leading to a 121% book-to-bill in Q3.

Commercial activity

During the third quarter of 2016, the Group continued to benefit from its commercial momentum and recorded order entry of € 2,845 million, representing a book to bill ratio of 102%.

The commercial activity was particularly strong in the UK leading to a 128% book-to-bill in Q3 with two major signatures, Aegon in Financial Services and Ministry of Defence in the Public sector.

By Service Line, Managed Services and Big Data & Cybersecurity recorded a high level of signatures leading to respective book to bill ratio of 112% and 107%. Book to bill was 95% in Consulting & Systems Integration. In Q3 2016, large contracts were signed in Managed Services, such as Aegon in the UK and Rheinmetall in Germany. Major contracts signed in Consulting & Systems Integration were Ministry of Defence in the UK and La Poste in France, while Big Data & Cybersecurity signed new deals in High Performance Computing and Cybersecurity related to large Managed Services contracts. In addition to contract renewals, Worldline signed contracts with new clients, notably with Pizza Hut for pan-European e-acquiring services and with a large French health insurer for a Contact & Consumer Cloud solution.

The full backlog at the end of September 2016 totaled to € 19.3 billion, representing 1.7 year of revenue. The full qualified pipeline was € 6.4 billion, compared to € 6.2 billion at the end of 2015 and representing 6.7 months of revenue.

Human resources

The total headcount of the Group was 96,396 at the end of September 2016 (including Unify Software & Platforms). The increase of +5.6% of the Group workforce compared to 91,322 at the end of December 2015 was mainly due to the circa 5,200 staff who joined the Group from Unify. On October 1st, circa 3,000 staff joined the Group from Anthelio, Equens, Paysquare, and Komerçni Banka Smartpay, leading to a total Group workforce of circa 99,500 staff.

2016 objectives

The Group confirms all its objectives for 2016 stated in the July 26, 2016 release, i.e.:

Exchange rates effect mainly came from the British pound (-9% year-on-year) and the Argentine peso (-38%). Scope effects amounted to €+117 million coming from the acquisition of Unify (€+152 million), the reduction of Xerox ITO acquired scope compensated by a purchase price decrease (€-23 million), and the sale of the Occupational Health business (€-11 million).

Q3 2016 revenue performance by Market

In € million

Q3 2016

Q3 2015*

% organic

Manufacturing, Retail & Transportation

980

966

+1.5%

Public & Health

744

726

+2.5%

Telcos, Media & Utilities

581

558

+4.1%

Financial Services

472

479

-1.4%

TOTAL GROUP

2,777

2,729

+1.8%

* At constant scope and exchange rates

9M YTD 2016 revenue performance by Service Line

In € million

9M 2016

9M 2015*

% organic

Managed Services

4,824

4,787

+0.8%

Consulting & Systems Integration

2,341

2,326

+0.7%

Big Data & Cyber-security

436

380

+14.7%

Total IT Services

7,601

7,493

+1.5%

Worldline

872

839

+3.9%

TOTAL GROUP

8,474

8,332

+1.7%

* At constant scope and exchange rates

9M YTD 2016 revenue performance by Business Unit

In € million

9M 2016

9M 2015*

% organic

North America

1,491

1,425

+4.7%

Germany

1,420

1,359

+4.5%

United-Kingdom & Ireland

1,344

1,371

-2.0%

France

1,220

1,183

+3.1%

Benelux & The Nordics

732

776

-5.7%

Other Business Units

1,395

1,378

+1.2%

Total IT Services

7,601

7,493

+1.5%

Worldline

872

839

+3.9%

TOTAL GROUP

8,474

8,332

+1.7%

* At constant scope and exchange rates

9M YTD 2016 revenue performance by Market

In € million

9M 2016

9M 2015*

% organic

Manufacturing, Retail & Transportation

2,980

2,948

+1.1%

Public & Health

2,383

2,258

+5.5%

Telcos, Media & Utilities

1,706

1,669

+2.2%

Financial Services

1,405

1,457

-3.6%

TOTAL GROUP

8,474

8,332

+1.7%

* At constant scope and exchange rates

Conference call

Today, Thursday, October 20, 2016, Thierry Breton; Chairman and CEO, Elie Girard, Chief Financial Officer, and Patrick Adiba, Chief Commercial Officer, will comment on Atos’ third quarter of 2016 revenue and answer questions from the financial community during a conference call in English starting at 8:00 am (CET – Paris).

About Atos

Atos SE (Societas Europaea) is a leader in digital services with pro forma annual revenue of circa € 12 billion and circa 100,000 employees in 72 countries. Serving a global client base, the Group provides Consulting & Systems Integration services, Managed Services & BPO, Cloud operations, Big Data & Cybersecurity solutions, as well as transactional services through Worldline, the European leader in the payments and transactional services industry. With its deep technology expertise and industry knowledge, the Group works with clients across different business sectors: Defense, Financial Services, Health, Manufacturing, Media, Utilities, Public sector, Retail, Telecommunications, and Transportation.

Atos is focused on business technology that powers progress and helps organizations to create their firm of the future. The Group is the Worldwide Information Technology Partner for the Olympic & Paralympic Games and is listed on the Euronext Paris market. Atos operates under the brands Atos, Atos Consulting, Atos Worldgrid, Bull, Canopy, Unify and Worldline.

Disclaimers

This document contains forward-looking statements that involve risks and uncertainties, including references, concerning the Group’s expected growth and profitability in the future which may significantly impact the expected performance indicated in the forward-looking statements. These risks and uncertainties are linked to factors out of the control of the Company and not precisely estimated, such as market conditions or competitors behaviors. Any forward-looking statements made in this document are statements about Atos’ beliefs and expectations and should be evaluated as such. Forward-looking statements include statements that may relate to Atos’ plans, objectives, strategies, goals, future events, future revenues or synergies, or performance, and other information that is not historical information. Actual events or results may differ from those described in this document due to a number of risks and uncertainties that are described within the 2015 Registration Document filed with the Autorité des Marchés Financiers (AMF) on April 7, 2016 under the registration number: D.16-0300 and its update filed with the Autorité des Marchés Financiers (AMF) on August 4, 2016 under the registration number: D.16-0300-A01. Atos does not undertake, and specifically disclaims, any obligation or responsibility to update or amend any of the information above except as otherwise required by law. This document does not contain or constitute an offer of Atos’ shares for sale or an invitation or inducement to invest in Atos’ shares in France, the United States of America or any other jurisdiction.

Revenue organic growth is presented at constant scope and exchange rates. Operating margin is presented as defined in the 2015 Registration Document.

Atos decided, as early as the acquisition date, to retain only part of the activity of Unify. As a result, the Software & Platforms business, along with the customers and the countries that were planned to be managed through indirect channels, have been accounted for as discontinued operations and are in the process of being physically carved-out to facilitate the disposal of this activity. Therefore, the 2016 and 2015 pro forma consolidated external revenue and operating margin reflect the retained scope of Unify only.

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